McDonald v. McDonald
| Decision Date | 06 January 1972 |
| Docket Number | Nos. 52,53,73 and 260,s. 52 |
| Citation | 192 N.W.2d 903,53 Wis.2d 371 |
| Parties | Chester R. McDONALD, a partner, under the firm name and style of McDonald Investment Company, Plaintiff-Respondent, v. Ronald C. McDONALD et al., Defendant-Appellants, Ora McDonald Bleser and Shirley McDonald Howerton, partners under the firm name of McDonald Investment Company, Defendant-Respondents. Chester R. McDONALD, Plaintiff-Respondent, v. McDONALD LUMBER CO., Inc., a Wis. corporation, et al., Defendant-Appellants, Ora Bleser and Shirley Howerton, Defendant-Respondents. Shirley HOWERTON and Ora Bleser, Appellants, v. James L. McDONALD et al., Respondents. In re Estate of Chester S. McDONALD, Deceased. Chester R. McDONALD et al., Appellants, v. Ronald C. McDONALD, Executor, et al., Respondents. |
| Court | Wisconsin Supreme Court |
Judgment in cases Nos. 52 and 53 affirmed excepting those matters raised by the motion for review and as to those, the judgment is reversed and the cause remanded for further proceedings.
Judgment in case No. 73 affirmed.
Order in case No. 260 reversed and the cause remanded for further proceedings consistent with this opinion.
These cases were tried separately in the trial courts but were argued and are considered together on appeal because they are interrelated and involve various aspects of the business affairs of the McDonald family in Green Bay.
The appeals in cases Nos. 52 and 53 are from a judgment declaring that all assets, regardless of whether the title or possession was in the partnership McDonald Investment Company or in the corporation McDonald Lumber Company, Inc., were the sole property of the partnership and the corporation had no right, title, or interest to such assets.
The judgment further declared the two daughters and the four sons of the McDonalds, either by agreement or inheritance or both, constituted all the partners of the partnership and had the following interests: Ronald, James, Chester, Jr., and Robert, each a 7/36th percent interest; Shirley Howerton and Ora Bleser, each a 4/36th percent interest. The judgment ordered the dissolution of the partnership, the liquidation of its assets, the distribution of the proceeds, and appointed a receiver to accomplish these purposes.
The appeal in case No. 260 is from the order of the county court denying the application to remove Ronald McDonald as executor in the estate of Chester S. McDonald, Sr., and approving the inventory and final account, which listed only an 18 and 1/2 percent interest in the partnership and 850 shares in the corporation.
The appeal in case No. 73 is from a judgment dismissing a complaint to set aside the deeds executed by McDonald, Sr., and his wife, on August 3, 1960, to the partnership and the corporation. The court held the validity of these deeds had been determined by the probate court and its action was res judicata.
Bittner, Petitjean & Hinkfuss, Green Bay ( Richard G. Greenwood, Green Bay, of counsel), for Ronald C. McDonald, McDonald Lumber Co. and others in Nos. 52 and 53.
Kaftan, Kaftan, Kaftan & Kuehne, Green Bay, for Chester R. McDonald in Nos. 52 and 53.
Habush, Gillick, Habush, Davis & Murphy, Milwaukee, for Ora McDonald Bleser and Shirley McDonald Howerton in Nos. 52, 53 and 73.
Bittner, Petitjean & Hinkfuss, Green Bay, for James L. McDonald and others in No. 73.
Kaftan, Kaftan, Kaftan & Kuehne, Green Bay, for Chester R. McDonald and others in No. 260.
Evrard, Evrard, Duffy, Holman, Faulds & Peterson, Green Bay, or Ronald C. McDonald, executor in No. 260.
Robert L. Bittner, Green Bay, for Robert L. McDonald and James L. McDonald, heirs in No. 260.
The many questions raised on these appeals require a brief statement of the barebackground facts which give rise to them. Chester S. McDonald and Margaret E. McDonald, his wife, had six children: Ronald, Chester, Jr., James, Robert, Shirley Howerton, and Ora Bleser. Prior to 1950 Mr. and Mrs. McDonald, in their individual capacities operating under the name of McDonald Lumber Company, accumulated a substantial amount of real and personal properties and businesses. In 1950 they set up a partnership with their four sons although the youngest of them was still in grade school. One third of the ownership interest was assigned to Mr. McDonald, one third to Mrs. McDonald, and one third divided equally among the four sons. The division of profits was on an equal basis among the six partners. The partnership continued the use of the name McDonald Lumber Company.
In 1955, at the suggestion of an estate planner, a corporation was organized which took the name of McDonald Lumber Company, Inc., and the partnership's name was changed to McDonald Investment Company. The corporation took over part of the businesses and properties although no conveyances were then made. However, on August 3, 1960, Mr. and Mrs. McDonald deeded certain properties to the partnership and other properties to the corporation in accordance with a contract made just prior to incorporation. Shortly thereafter on August 15, 1960, Chester S. McDonald Sr., died, leaving a will in which he gave all his property equally to his children. Mrs. McDonald was the executrix of the estate and filed an inventory in February, 1961, in which she showed her husband's interest in the partnership to be 18 and 1/2 percent and an ownership of 850 shares in the corporation. In 1964 Ronald McDonald, the eldest son, replaced his mother as executor of his father's estate and in November of 1965 Mrs. McDonald died, leaving a will in which she bequeathed her property equally to all her children. Ronald McDonald was appointed executor of fher estate and became president of the corporation to succeed her, as she had previously succeeded Mr. McDonald, Sr., as president.
After the death of the mother, dissension began to appear among the children. In 1967 Chester, Jr., was voted out of the corporation as a director and the number of directors reduced to include only Ronald, James, and Robert. In August, 1969, Chester's employment with the corporation was terminated. Within a month Chester commenced the action in case No. 53 to dissolve the family corporation. The following month he commenced the action in case No. 52 to dissolve the family partnership. On September 12, 1969, Chester, Jr., filed a petition in the probate court to remove Ronald as executor of his father's estate. On November 17, 1969, he objected to the final account on the ground his father's interest in the partnership was greater than 18 and 1/2 percent. In the meantime on November 10, 1969, his two sisters filed objections to the inventory and final account, asked for the removal of Ronald as executor on the ground of conflict of interest and for a discovery into the mental condition of their father at the time he made the conveyances of August 3, 1960. The sisters had previously, on October 19, 1969, commenced an action by service of a summons in case No. 73 to set aside these deeds, but the complaint in this matter was not served until a year later in October, 1970.
These cases were heard on July 8, 9, and 10, 1970. The original findings of fact and conclusions of law were personally drawn up by Circuit Judge Andrew W. Parnell. He found it was the intent of Chester S. McDonald, Sr., and Margaret E. McDonald, his wife, that interest in the family assets of each of the four sons should be equal, with an equal interest divided between the daughters; that this intent was reflected by their statements and actions during their lifetimes. He also found it was the clear intent and understanding of the incorporators that the corporation was to be formed and used only to facilitate the management of the overall-partnership operations and for such inherent and incidental advantages and fringe benefits as it would contribute to the purpose; and that the corporation was organized for the main purpose of using it as a vehicle or medium of operation for part of the partnership business and was not organized to constitute an independent separate or non-integrated entity. He also found the entire family and partnership ventures consisted of a single integrated operation and it was the intention of the parties to maintain and operate them as such, whether accomplished by means of partnership, corporation, family or joint-adventure procedures. As a conclusion of law, the trial court held the assets in the control or possession of the corporation were assets of the partnership or the family.
After further consideration on the resumption of the trial on February 1, 1971, additional findings of fact and conclusions of law were made on September 17, 1971. The court found there was no agreement between the parties that accounting fluctuations in the capital accounts in the partnership due to overdraws should increase or decrease their proprietory interest, but that profits were to be shared equally between the six partners and not in proportion to their proprietory interests which were continued unchanged. The court also found Ronald, James, and Robert, had, by joint and concerted action, so conducted themselves in the business affairs of the partnership and of the corporation as to make it not reasonably practical or feasible to carry on the businesses on the partnership basis; and, importantly, that the assumption of exclusive control of the businesses by Ronald, James, and Robert operated to cause great economic disadvantages to Chester R., Shirley, and Ora, as minority interest-holders, contrary to and wholly inconsistent with the express and implied intentions and purposes of their parents that there be equality in the sharing of interests and profits between their children in the businesses and properites.
As conclusions of law, the trial court found the total assets denominated as corporate or partnership assets were the sole property of the partnership and this partnership should be dissolved...
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